Spread Betting December Financial Times 2009

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SPREAD BETTINGFINANCIAL TIMES SPECIAL REPORT | Friday December 11 2009

www.ft.com/spread-betting-dec-2009

Clients keepoptions openINSIDE: We report on the first extensive study of the behaviour

of traders in the UK

www.fintrader.net





Spread Betting

switch accounts just to takeup these promotional offers.“A classic reason is that aclient new to spread betting will open an account with aprovider then discover thathe can get a better deal else-where.”

But once that client hasbeen t ra ding f or som etime, competitive pricing and platform performancebecome more important .“Our main attractions forclients is that we have astrong track history of offer-ing tighter spreads, lowermargins, cheaper rolling costs and more robust plat-form availability,” says MrDenham.

Paddy Power also usespricing to entice switchers.“We try to keep our spreadsin the most popular marketscompetitive to attract theseexperienced clients,” saysMcAnaney. “For example,we run offers such as a1-point spread on Wall Sttrading.”

However, consistency of pricing is more important toactive traders, argues MrTooth at IG Index. “Lastmonth, IG Index became thefirst spread betting group tooffer a consolidated pricef e ed t ha t com b in es t h eprices from the LSE andEuronext, with Europe’sleading Multilateral Trading Facilities Chi-X and Tur-quoise,” he notes.

“This means better pricesfor clients and the ability toacces s t o ma r ke t s ev e nwhen the LSE is having technical problems as it didthe day the Dubai Worldstory hit the headlines.”

At ODL, technical innova-t i ons , such a s s t r a igh t -through processing (STP),have proved to be the big draw – provided the price isalso right. “The only way tokeep clients is by offering the best technology, themost user-friendly platform,the tightest of spreads, andback it up with first classcustomer service,” says MrHossain.

City Index now aims toattract mobile customerswith its new Apple iPhoneapplication.

In the next 12 months,though, the challenge forproviders will be winning over new traders ra therthan fighting over the exist-ing 93,000.

Paul Inkster, head of prod-uct at Barclays Stockbro-kers, thinks client numberswill go up if the level of understanding does. “Thereis s ignif icant scope toincrease the size of the mar-ket,” he says.

“Education is the key – giving clients access to toolsthat give them the bestchance to operate profita-bly.”

Loyalty may be bought for£100, but knowledge is morehighly valued. In the sur-vey, more traders cited edu-cation (18 per cent) and ademo account (22 per cent)as a reason for choosing aspread betting provider thanany introductory offer (15per cent).

Brand loyalty: nearly half ofspread betters are “likely” tochange their main provider inthe next 12 months Reuters

IG Index

CMC Markets

City Index (including Finspreads)

Capital Spreads

IG Markets

CMC Markets

City Index

22%

11%

11%

32%

19%

16%

22%

13%

38%

32%

28%

62%

Excluding ‘white label’ services Including ‘white label’ services

30%

9%

8%

6%

50%

22%

27%

17%

Top four UK spread betting providers*

Spread betting in the UK: the big numbers

Top three UK contracts for difference providers*

* By primary market share, excluding white label relationships

Source: Investment Trends

Traders using as‘main provider’


Traders holdingan account




Number of traders placinga spread bet or CFD trade

in the past 12 months

93,000Number of active

spread betters

83,000Average number ofaccounts held by

active traders

2.5Proportion of traders

‘likely’ to change providersin next 12 months

48%Proportion of active tradersspread betting on indices

76%



interview 109

With a huge

mansion inMallorca,millions in

the bank and a dream lifestyle,you’d be forgiven for thinkingVince Stanzione was some sortof celebrity. In fact, he made hisfortune by spread betting on thestock-market and developing hisknack of predicting trends into awildly successful trading system.We decided to find out more.

What is your backgroundin economics / the stockmarket?I left school at 16 with a fewO levels and managed to geta job as a junior at NatWestWorld Money Centre in ForeignExchange in 1985 on the grandsalary of £100 a week. Fromthere I worked up and in lessthan 2 years I was tradingmulti-dollar positions for alarge American Bank both inthe UK and then in the USA.I trained on the job as well asstudying everything I could inthe evenings and weekends.I was always good withcomputers and would use the banks computers to programmemy own trading systems.

Describe your trading styleTrend following; all my money both in business and tradinghas come from seeing trendsand getting in on them. I don’tclaim to be first in or firstout but the bit in the middle,which in many cases is a big

Meet aself-mademillionaire

Josephine O’Donoghue chats with VinceStanzione about his self-made wealth, tradingon the stock market and the economy today

bit, is where I make my money.

Also unlike most I don’t mindmaking money both from goingshort (betting things to godown) or long (betting thingsto go up). In many cases I have aspread of trades and trade pairsfor example:ShortUS$ Index – LongGold; Short Tiffany & Co. – LongMcDonalds, which wasone of my actual trades in 2008.

How did you develop yourtrademark betting style and

method?It was a build up from theknowledge I amassed whilsttrading in real life situations. Ihave also always had an interestin psychology and why peopleact the way they do. Markets areall about psychology, crowdsand perceptions – why does a

barrel of oil cost $40 andthen a few months later it’s at$147?

It’s all about perceptions,greed and fear. I read various books and papers mainly fromthe 1900 to 1960 period andrealised that nothing was new inmarkets and what happened inthe past would repeat.

How is your method of training different fromthe rest?Many try to predict and beclever by calling tops and

bottoms of markets; I tradewith trends and with what’shappening rather than whatshould be happening I have been around a long time andseen plenty of people and

systems come and go, yetI am still here, so that tellsyou something. Another maindifference is my systems adaptto various markets such ascommodities, shares, currenciesand indices – trends are likefashion; they change and youneed to adapt with them.

How long did it take toperfect your system?It’s taken a good 10 years.I am now at the point where,while I may make a fewminor tweaks, the core systemhas not changed over the last 2years. While every trader wantsto improve and every day is alearning process you have toresist the temptation to keepmessing with what’s working.

What are your predictionsfor 2009 – will there be acrunch for everyone or

will you still benefit fromthe changing market?There are always opportunitiesin markets, especially fortrading both on the upand down. I don’t make

predictions; rather I let mysystems tell me what thetrends are. Right now I am buying agriculture and softcommodities such as soyabeans,wheat, corn, coffee and cotton.After a large sell off in thesecond half of last year theseprices are starting to recover.

Can you offer any tipsto anyone interested inspread betting?Invest in education (and I amnot saying that just because Ihave a course!). I would havepaid anything to have learntthe information in my courserather than have to go throughthe pain and suffering of lossesto learn it the hard way.

Once you have studied hard,then start trading with a fewsmall bets and work up fromthere. Also star t reading aboutpsychology, understand yourown, and understand crowdpsychology.n

To fnd about more about Vince's

...in less than 2 years i Was tradingmulti-dollar positions for a large

american Bank...

course visit www.fntrader.net

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Spread Betting December Financial Times 2009